Del Walmsley’s Three Rules of Investing

It Almost Makes Too Much Sense

Del Walmsley, the founder of Lifestyles Unlimited® has taught and lived by three fundamental rules in his real estate investing career. These rules make so much sense you might not see them at first… because smart people have a hard time letting go of logic systems that took them a lifetime to build.

Let these rules soak in until they become clear to you. Once you can see them you’ll wonder how you ever let yourself put money into risky investments.

Interestingly enough, these ideas aren’t new. They’re based on timeless principles that have been around thousands of years. They are the same principles that Benjamin Franklin used to create a massive amount of wealth over 225 years ago. They are the same principles that Andrew Carnegie used and passed on to Napoleon Hill in the famous book, “Think and Grow Rich.”

These are the same principles that Warren Buffet lives by and has been trying to tell you for years… but you didn’t hear him.

You Won’t Get It

Even now, after putting these rules into an article and releasing them to the world, most of you won’t get it. You’ll think it’s too good to be true, or too boring, or too whatever.

That’s the paradox of true wisdom. Napoleon Hill, Warren Buffet, and now Del Walmsley have been screaming from the mountain tops over the last 100 years, but only a few will listen.

What Warren Buffet Has to Do with Real Estate Investing

A lot of people wonder why we always reference Warren Buffet while, at the same time, putting down the stock market. Many stock investors look up to Warren Buffet for guidance, but they don’t realize that he is in a very different business than they are.

Warren Buffet is not sitting behind his PC on an Ameritrade account buying and selling stocks for his 401k. In other words: he is not buying stocks at retail with his own money.

Warren Buffet is buying entire companies at wholesale with other people’s money (OPM).

Retail vs. Wholesale

Can you see the difference? It’s subtle, but it makes all the difference in the world. Let’s start with retail vs. wholesale. Buffet finds companies that he can buy for fifty cents on the dollar. In other words, he is sticking to Del’s first rule of investing: Don’t lose money. More on that in a minute.

Del Walmsley learned to do the same thing in his favorite asset class: real estate investing. He teaches us to buy properties for fifty cents on the dollar. When you buy an asset for so cheap, it’s very hard to lose money on it.

Leverage

What about OPM vs. personal money? Buffet uses the power of leverage to amplify his wealth exponentially. I once saw a documentary that chronicled his early years of investing. He literally went door to door in his neighborhood to raise money for his investments.

When you’re using the power of leverage to buy assets for fifty cents on the dollar, you can’t get rich slow.

Rule #1: Don’t Lose Money

Don’t lose money. Makes sense, right? So why do you put money into investments that can lose you money?

Don’t lose money. Can you imagine how much money you would have if the principle in all of your investments was sacred?

Del teaches us to only invest our money in assets that don’t risk our principle. So, which assets would qualify?

Stocks?

Can you lose your principle when investing in stocks? Absolutely.

We are all painfully aware of this fact now that the market has crashed… again. But we should have known it was coming because it crashes every seven years or so.

Retail Real Estate?

Can you lose your principle when investing in real estate at retail prices? Absolutely.

People in California and Florida are painfully aware of this fact. As Del says, real estate by itself is not a panacea. Five years ago, people would pay anything for real estate because they thought that all real estate went up in value.

Wholesale Real Estate?

Can you lose your principle when investing in real estate at fifty cents on the dollar? Only if you mismanage it.

We can’t all go out and buy massive companies for fifty cents on the dollar like Warren Buffet. The easiest way to emulate Buffet is with real estate. An individual can go out and buy a single family home for fifty cents on the dollar and start to build wealth like Warren Buffet and Del Walmsley.

Rule #2: It Has to Cashflow

Del mentioned a couple of times on his radio show this last week that dividends aren’t what they used to be. In the old days, you bought a stock for it’s dividend. Today, more and more companies are doing away with dividends because people are more focused on appreciation.

Cashflow is the foundation of Del Walmsley’s philosophy and the way we build wealth. We call cashflow the cake, while everything else is the icing. Do not buy an asset unless it cashflows.

Sin of California Investors

This is the major sin of the average California investor in the early 2000’s. An entire industry was built around flipping houses based on price appreciation alone. What they soon found out is that they were speculating; and when prices corrected, they got stuck in cash-sucking whirlpool.

If you only buy assets that cashflow, how much do you care if they go down in value? Much less. Furthermore, if you bought them using Del’s 1st rule, you’re not going to lose money if they go down in value because you bought them for fifty cents on the dollar.

Rule #3: You Can’t Get Rich Slow

Here’s another paradox: The first two rules seem conservative compared to what you are used two, and they are… but if you follow them, you can’t get rich slow.

Isn’t that interesting? If you become more conservative and only put your money in solid assets, you actually out-perform the so-called “aggressive” investors.

How does this work?

Put simply: once you become a money-making machine, people will literally throw their money at you. You will begin to harness the power of leverage like Warren Buffet and Del Walmsley. The banks will trust you enough to give you loans. People will trust you enough to become your passive partners. Your investment base will become massively larger than what you could have accomplished on your own.

Hear it for Yourself

I can write all I want, but I’ll never do Del’s words justice. To get the whole picture, you have to hear it from the man himself.

But don’t wait too long. Del has said that this may be his last year of teaching. He gives a 2-day class that is out of this world. He packs so much information into sixteen hours of class, I promise you’ll learn more about creating wealth than you had in all your years up to that point.

I understand the basics of the ‘Three Rules’. Please explain why the plan is only practiced with residential properties, either single or multi-family. I assume there are issues with expanding this philosophy to other income producing properties, such as commercial or ‘special use’ properties, such as mini-storage facilities, etc.

Del Walmsley,
Got Email from Shauwn Digman. Called S.A. office to register for 8/12/10 open meeting… Spoke with Rene Manes – very informative & encouraging. Look forward to meet the S.A. people that can help me & I want to help others a.s.a.p. Such a need to get the Wisdom & Basics out to make it as a ReaL Estate Investor, to end the struggles of lack, bad bosses & co-workers… Work Hard & Smart is the way!
Rene also mentioned I might get something if went to website, so I did &:

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